Huge differences between FAFSA EFC and individual college Net Price Calculator EFC numbers

Paying for College
1

I am running numbers and at a loss to explain the wide variability in EFC calculations from college to college. I also don’t know what the difference between the FAFSA number and the individual college numbers signifies. Is the latter the only thing that matters? Please educate me!

Question 1: I have run the net price calculators for 18 private colleges with exactly the same numbers:

  • Only #1 and #2 are under the FAFSA number.
  • #3-#16 are over by a range of 9% to 35%.
  • #17 and #18 are ridiculously high. Like 100% and 137% over the FAFSA number respectively. High enough for me to question the accuracy of their calculators, unless they are taking something into account the others are not: our biggest asset, i.e., our house. We are cash poor but property rich, like many in our part of the country, which has seen steady growth in real estate prices over the years. They probably expect us to take out the HELOC from hell, or sell and move to a cheaper location. Am I correct?

Question 2: What does this mean? We visited practically all of the above 18 schools. We thought that it was a worthwhile investment in her future, regardless of the cost. My D interviewed on-campus at all of the schools that would let her, so she has a good idea of what she wants. Now she is hesitating to apply to her top choice (sadly, #17 above) under ED-II only because we can no longer predict with any degree of accuracy whether or not the net price will be within our reach. Plus, it is a total outlier compared to similar colleges. Very disappointing since we identified many reasons why it is the best fit for her. RD will be much, MUCH harder for admissions based on acceptance rates, relative size of applicant pool, and % of entering class filled through ED vs. RD. However, if she is lucky enough to get in, we can at least compare financial aid packages and determine if it’s worth going to her top choice. I’m sure she’ll be happy at any of the other colleges she is applying to.

Maybe if I understood the significance of the calculations better, I would be able to make an educated guess instead of speculating. Help!

2

To further clarify my confusion (oxymoron?), I went into this process thinking that the EFC would be the same for all colleges, and that our decision would hinge on two variables:
(1) The cost of attendance at each college, primarily tuition plus room & boarding, since other expenses (books, supplies, transportation) are unique to each student; and…
(2) The aid mix, i.e., grants vs. loans vs. student earning expectations for school term work/study and summer job.

Seems more complicated than that.

3

Funny thing is, several of the colleges that are reputed to have the most generous financial aid packages are the least generous for us specifically. Maybe it’s because they are diverting all their resources to the lower-income brackets with limited assets (such as home ownership) at the expense of middle and upper middle class families. We probably fall into the upper middle class category, but we also live in an area with the highest cost of living. Early Decision definitely favors the wealthy and privileged. I would have preferred that truly need-blind colleges level the playing ground and force everyone to apply at the same time. I guess they need to factor in yield, especially in the case of the small LACs.

4

Google it. Lots of explanations online:

http://www.forbes.com/sites/troyonink/2016/01/30/2016-guide-to-college-financial-aid-the-fafsa-and-css-profile/#5df08cf34a45

https://bigfuture.collegeboard.org/pay-for-college/paying-your-share/the-expected-family-contribution-efc-faqs

http://www.forbes.com/sites/baldwin/2013/02/28/college-aid-formulas-fafsa-profile-and-consensus/#16d67c632446

5

The only the the FAFSA really does is determine your eligibility for federal grants.

The overwhelming majority of schools ** do not** meet 100% demonstrated need There are approximately 60 that do

There are only 3 schools that give “super aid” (HYP) meaning that if your income is between $180 and $200knwith typical assets (just your primary home and some savings ) you have a chance of getting aid where you would be full pay everywhere else

There are schools that may have low/ middle income initiatives in place if your family makes 59k, 69k, 75k, 100k125k with typical assets you could pay 0 get free tuition or anything in between

Each school determines their own financial aid policy and determines whose income and assets to use. For example U of Chicago uses the FAFSA only and just looks only the custodial parent. Vanderbilt uses the profile and only looks at custodial parent household information. Princeton uses their own form and only looks stingy from student biological parents. There are schools that want info from both the custodial and non custodial parents.

There are schools to if you are divorced/ part of a blended family looks at information from both parents and their respective spouses. In this case the net price calculator may not be accurate

Some schools give student loans as part of the package. Some schools give no loans while others limit the student loans

Home equity may be looked at differently at each school. Some schools may look at your home equity as a multiplier of your salary (2X, 3X, 5x) while other schools look at home equity as a source that can be paid to pay for college. Real estate other than your family residential home is looked at as an assets where some schools feel that all equity can be used to pay for college. I one from rental is considered income to be used for college

Retirement funds- if you are maxing out your 401k/403b/etc, the contributions that you make during the year are added back as income

If you are self employed, a business or farm owner some of the deductions that you may be able to write off your taxes are added back in. In this case the net price calculator may not be accurate.

There is no one size fits all formula even at deep picket school

During my D’s cycle she was accepted into ever school she applied to (ivy, Top LACs and other to 20 schools. All met 100% demonstrated, all used the FAFSA & Profile (so they all got the same information) there was almost a $15k difference in financial aid packages including loans, and no loan packages.

No magic formulas

6

Some colleges look at equity and consider that it means HELOC. Boston College is especially egregious in that regard. Princeton is the opposite.
You have to focus on colleges that cap or don’t consider equity. For a list, check out the college solution website + equity + assets (google it).

Your EFC is the minimum you’ll have to pay. Only 60-80/3,700 universities even meet that.

7

@nw2this - That’s very helpful, thank you. The articles answered many of my questions, though they don’t explain the results for #17 and #18. #17 is a 568 Group school, but so are a bunch of other schools in the middle. #18, on the other hand, is not. I thought maybe it had to do with Institutional Methodology vs. Consensus Methodology (568 Group), but it doesn’t appear to be the case.

8

You can test the effect of home equity by changing the numbers you put in to the net price calculator at a given school to see how that impacts the results.

Home equity is a part of your family’s overall financial strength. I don’t know your particular situation, but It doesn’t necessarily have to mean taking a HELOC, rather it could mean that you might be able to tap other assets (if you have them) to a greater extent than you would otherwise be expected to.

9

In order to fully explain to why you are seeing what you are seeing when you run various net price calculators, you would have to tell us your family’s financial situation and the schools that you are looking at.

FAFSA EFC generally has nothing to do with EFC as calculated by a school’s NPC, especially if the school is a more generous meets full need institution. Yes, that can be confusing, but if EFC was the same between FAFSA and every school, what would be the point of every school having their own net price calculator?

For need based financial aid, the most important distinction between schools is whether the school meets full demonstrated need or not. At a school that does not, there is a chance that your student will be gapped, i.e. the financial aid offered and your EFC will not add up to the cost of attendance. Maybe that’s why you’re seeing such a wide range of net costs, although without knowing the specific schools that you are looking at it’s impossible to say for sure.

As others have mentioned, even for schools that meet full need there can be wide differences in your EFC because of how that need is calculated. A few of those schools will not consider any primary home equity as an available resource. Most of them will cap home equity as a multiple of income (1.5X, 2X, etc.) in the financial aid calculation. And some will have no cap on home equity.

10

things that can change the financial picture.

  1. Home equity in your primary residence. Some schools use none...and others use a lot.
  2. Self employed parents...or parents who are business owners. Expenses allowed as deductions by the IRS...some are NOT allowed for financial aid purposes. Are your self employed?
  3. Real estate other than your primary residence.many colleges look at secondary real,estate as 100% expendable...in other words...you can sell to fund college.
  4. Any parents divorced? Remarried?

Need based financial aid is based largely on your income (2017-2018 forms are using the 2015 tax year info. Your assets also add to the mix.

ETA…it looks like your kiddo got accepted to Hofstra with a $25,000 merit award? Hofstra is $60,000 a year…or more…does not guarantee to meet full need. In other words, it’s a costly school.

Hoping your kid has affordable options on the application list.

Oh…and in the very vast majority of cases…you WILL be expected to pay whatever the school determines is your family contribution. You won’t be receiving need based aid to cover that…unless your kiddo receives a very significant merit award.

11

Also, even among those that claim to “meet need”, they can define “need” differently from each other and the FAFSA EFC calculation. Also, each college may have a different expected student contribution (the amount of student loan and student work expected).

Actually, this distinction is not meaningful once you have run the net price calculator for each college. Again, this is due to the varying definition of “need” that each college uses and the expected student contribution.

Older thread with examples:
http://talk.collegeconfidential.com/financial-aid-scholarships/1675058-meet-full-need-schools-can-vary-significantly-in-their-net-prices.html

12

“best fit for her”- sit your D down and have a good and forthright discussion on why there is no such thing as a best fit. (especially if you can’t afford to send her there, but that’s another issue).

I’m less worried about your finances here- I think you’ll figure something out- and more concerned about your D’s mindset. College isn’t Disneyland but with more books and more alcohol. College is going to have good days and bad days and terrible days and terrific days. Just like life. And it involves trade-offs- maybe a college which is bigger than what she initially thought she wanted, but is in a great city. Or a college which is smaller than what she wanted but is offering a terrific merit award which can go up next year if she qualifies for a departmental scholarship. Or a college which is in a terrible location in her mind but is the top program in the field she wants to study.

Don’t walk into this like you are buying a pair of shoes at Macy’s where you can just keep on trying things on (or walk across the street to DSW or Payless if you want even more options). There isn’t the best fit- just a series of trade-offs.

I would not go forward with ED2 if there are still questions around affordability. That would be my line in the sand…

13

As others have already explained in more detail, colleges have their own formulas and may or may not be as generous as others (just depends on how much money they have to do so). But here is an article about home equity specifically. Click on the link in the article labeled “Home Equity Spreadsheet” (it looks like a title, so you might miss that it is a link) and you’ll see a list of many colleges and whether they cap the equity (but keep in mind this information is 2 years old and formulas can change all the time).

http://www.thecollegesolution.com/will-your-home-equity-hurt-financial-aid-chances/

14

Of course it’s meaningful. Colleges that pledge to meet full demonstrated need, even if each school calculates that need in a different way and EFCs are different, will still as a general rule provide more need based aid than colleges that don’t meet full demonstrated need for every accepted student. This distinction can be a good starting point for determining where the best need based aid will come from. Net price calculators are a useful tool for honing in on what the actual aid number will be, and it’s entirely possible that better need based aid might be found at a school that doesn’t meet full demonstrated need for all students (for instance, if the applicant is particularly appealing to the school). But in the initial phase of determining which schools will probably provide the best need based aid, it’s an important distinction.

15

If you have 18 schools, they probably don’t all cost $72k per year. The important number is the net cost to you (including loans). If the COA at #3 is $45k and she gets a $30k grant, that’s going to be a better financial offer than a $40k grant from a $72k school.

16

I certainly hope all 18 schools aren’t $70,000 a year schools.

What other schools are on this application list besides Hofstra.

17

<<<<
between the FAFSA number and the individual college numbers signifies.
<<<

FAFSA EFC is a federal number. This is a free country. There is nothing the federal gov’t can do to require any school to respect FAFSA EFC and/or to give you the aid for the difference.

If the Feds changed their calculations to give everyone an EFC 0, that wouldn’t mean that all colleges would become essentially free. (Even those with EFC 0 rarely get a lot of aid).

More to that point, the Feds calculating an EFC does not magically provide colleges with a bigger aid budget…and most colleges have little to no aid budget.

18

OP here. Thanks for all the advice. The different articles, calculators, and perspectives here are useful. I spent so much time researching colleges and college towns that I neglected to do my homework on how to pay for all of this. Shame on me. I have finally figured out our situation. Let’s just say that I will be giving my girls better advice about saving money for their future children’s education than I received from my broke parents. :frowning: I should have been more disciplined and pragmatic when I was younger. You live and you learn, and the family grows stronger with each generation.

Sorry, @thumper1 , where are you getting Hofstra from? :slight_smile: We first learned of Hofstra during the presidential debate that took place there (no disrespect to Hofstra students; we’re from California). I’m sure it’s a nice school, but we don’t know anything about it. To be clear, she hasn’t been admitted anywhere yet - deadlines are looming; and only a handful of the colleges offer need-blind merit aid. If it comes, great, but she’s not holding her breath. None of the schools are $70K schools - see below.

For the curious, my D is considering a list that comprises excellent LACs (co-ed and all-women’s) in the Northeast, Midwest, and Southern California. You can guess which ones. Plus, she threw in a few respectable research universities. Each of the larger institutions was selected very carefully and for specific reasons. I miscounted, by the way: there are 20 schools. From least expensive to most expensive total cost of attendance (excluding the guesstimates for books, supplies, personal expenses, transportation), here are the colleges she is considering. The total cost of tuition & fees + room & board is shown for each. Median = $64,276, average = $64,106.

Rice University (Houston, TX) $56,970 - merit aid offered
Grinnell College Grinnell, IA) $60,738 - merit aid offered
Stanford University (Stanford, CA) $61,932
Princeton University (Princeton, NJ) $62,995
Harvard College (Cambridge, MA) $63,025
Bowdoin College (Brunswick, ME) $63,500
Swarthmore College (Swarthmore, PA) $63,550
Smith College (Northampton, MA) $63,914 - merit aid offered
Carleton College (Northfield, MN) $64,071
Bryn Mawr College (Bryn Mawr, PA) $64,220 - merit aid offered
Middlebury College (Middlebury, VT) $64,332
Yale University (New Haven, CT) $64,650
Wesleyan University (Middletown, CT) $64,862
Pomona College (Claremont, CA) $64,957
Williams College (Williamstown, MA) $65,180
Dartmouth College (Hanover, NH) $66,174
Amherst College (Amherst, MA) $66,186
Pitzer College (Claremont, CA) $66,192
Scripps College (Claremont, CA) $66,664 - merit aid offered
Haverford College (Claremont, CA) $68,010

If various websites and statistics and academic advisers are to be believed, my daughter has a good mix of safety, match, and reach schools up there. I’m confident that she’ll get into at least one of these. Now she just has to cut the list by half. The EFCs are all over the map, as are the aid packages, so we will think this through carefully as a family. She wants to go to grad school or professional school after college, so we have to keep those costs in mind as well.

What you don’t see in the list are the in-state public schools she has already applied to: seven University of California campuses (Berkeley, UCLA, etc.) and a California State University campus known for its STEM programs. They are all fine schools with total costs well below our FAFSA EFC. Their only issue is that they are too big, cutthroat, and impersonal for my D’s tastes. Fighting to get into the classes of your choice in order to graduate in four years (at least in impacted majors), and stalking professors who don’t care to remember your name are not her idea of a great college experience. It would be like a continuation of her extremely competitive, public high school, but on a larger scale.

Anyway, wish her luck!

19

Due to acceptance rates, all the private colleges you listed are reaches. Bryn Mawr might be considered a high match rather than a reach, especially if she’s shown a lot of interest, but otherwise everything else is an automatic reach regardless of stats. If she really wants smaller colleges, have her apply to 2 LACs with acceptance rates in the 35-50 percentile. The top CTCL would be good - pick between Whitman, Reed, St Olaf, Agnes Scott, Denison, Centre, Clark, Lawrence.

20

OP- this looks like a very challenging process to manage.

Beware of “specific reasons” since invariably it comes back to bite you. Kids think they need to major in Bioengineering or International Relations or Museum Studies or whatever. This is false. A kid can major in good old fashioned/plan vanilla Mechanical Engineering and Political Science and Art History (or whatever) and come out with the same degree with the same course of study as their counterpart at a college which offers the same degree but with a better name.

Before you go whole hog on this huge list (plus the colleges she’s already applied to- oh my gosh) I’d make sure you aren’t slicing the bologna too thin. I’m not being critical- but she can only attend one college and this looks like a monster list even if you cut it in half.

And I’m not seeing the “match” type colleges unless she’d be happy to attend one of her safeties and you can afford it.

Which STEM discipline is she interested in and what happens if/when she changes her mind which most college kids do at least once???

And recognize that grad school for a doctorate will be paid for by the school. If she gets admitted without funding, that is the universe telling her that she’s not good enough to be in a PhD program. So move the financial issues around grad school aside. If you are looking at professional school-- different can of worms. But the majority of students in professional schools are indeed financially independent of their families and find a way to pay for it, work for a few years, get an employer to pay, etc.

So I’d be very focused on trimming the list to a manageable and affordable set…